The voluntary sector or community sector (also non-profit sector or "not-for-profit" sector) is the duty of social activity undertaken by organizations that are not-for-profit[1] and non-governmental. This sector is also called the third sector,[2] in contrast to the public sector and the private sector. Civic sector or social sector are other terms for the sector, emphasizing its relationship to civil society. Given the diversity of organizations that comprise the sector, Peter Frumkin prefers "non-profit and voluntary sector".[3]

In India this sector is commonly called the "joint sector", and includes the industries run in partnership by the state and Private Sector. In a wider sense the initial investment is made by the state and later the handling is done by the private sector. But here the private sector is responsible to the state when it comes to handling.

In Israel this sector is commonly called the "Third Sector", (Hebrew: המגזר השלישי‎) and generally refers to non-profit organizations (NPOs) and non-governmental organizations (NGOs) with the line between the two quite fine. These organizations generally fill a gap in the existing government or municipal service provision. Examples include United Hatzalah for emergency medical first response, Yad Sarah for free loan of medical equipment, Yad Eliezer for poverty relief efforts, Akim for assistance for the mentally handicapped, and SHALVA for children with special needs.

The Cabinet Office of the British government until 2010 had an Office of the Third Sector that defined the "third sector" as "the place between State and (the) private sector."[5] The Conservative/Liberal Democrat Coalition Government renamed the department the Office for Civil Society. The term third sector has now been replaced in Government usage by the term Civil Society or more usually the term Big Society, which was devised by political advisers and which featured prominently in the Conservative Party's 2010 election campaign.

The U.S. nonprofit sector employed 11 percent of the U.S. workforce in 2015. It contributed around 6 percent of GDP that same year (up 3 percent in 1960). And this does not take into account volunteering—the equivalent of an additional 5-10 million full-time employees (depending on how you count), labor worth hundreds of billions of dollars per year.

Each year, seven out of ten Americans donate to at least one charitable cause. Contributions are from two to 20 times higher in the U.S. than in other countries of comparable wealth and modernity.[6]

The presence of a large non-profit sector is sometimes seen as an indicator of a healthy economy in local and national financial measurements.[7] With a growing number of non-profit organizations focused on social services, the environment, education and other unmet needs throughout society, the nonprofit sector is increasingly central to the health and well-being of society.[8]Peter Drucker suggests that the nonprofit sector provides an excellent outlet for a variety of society's labor and skills.[9]

[10]The first two decades of the 20th century were characterized by a public zeal for social reform and social justice known as the Progressive Era.The newly founded National Association of Societies for Organizing Charity had immediate influence during that era. Its extensive field work helped organize new societies and strengthen others. Smaller cities became well-organized, with the South and Northwest particular areas of focus. To permit membership of Canadian societies, the association changed its name in 1912 to the American Association of Societies for Organizing Charity. In 1917, it became the American Association for Organizing Charity. These agencies increasingly were providing direct service to individuals and families. Pauperism, child welfare, juvenile justice, sanitation, tuberculosis, and other health issues were emergent problems for new and existing agencies.The American Red Cross fueled a nationwide fervor for social service. Founded in the United States in 1881, it was reorganized in 1905 to focus on military personnel. With this pivotal decision, the business of organizing charities quickly evolved into the business of social work.

In 1976, Daniel Bell predicted that the third sector would become the predominant sector in society, as the knowledge class overcame the effects of the private sector.[11] This presently holds true in a number of European countries. According to a recent study by Johns Hopkins University, the Netherlands has the largest third sector of 20 countries across Europe.[12] In Ireland the non-profit sector accounts for 8.8% of GDP.[13] In Sweden, the nonprofit sector is attributed with fostering a nationwide social change towards progressive economic, social and cultural policies,[14] while in Italy the third sector is increasingly viewed as a primary employment source for the entire country.[15]

In the United States, approximately 10% of GDP is attributable to the third sector. Donating to private religious organizations remains the most popular American cause, and all religious organizations are entirely privately funded because the government is limited from establishing or prohibiting a religion under the First Amendment.[16]

Although the voluntary, community and not-for-personal-profit sectors are frequently taken to compose the "Third Sector" each of these sectors or sub-sectors have quite different characteristics. The community sector is assumed to comprise volunteers (unpaid) while the voluntary sector are considered (confusingly) to employ staff working for a social or community purpose.[17] In addition however, the not-for-personal-profit sector is also considered to include social firms (such as cooperatives and mutuals) and more recently governmental institutions (such as Housing Associations) that have been spun off from government, although still operating fundamentally as public service delivery organisations. These other types of institutions may be considered to be quasi-private or quasi-public sector rather than stemming from direct community benefit motivations.

There have been long-ranging arguments regarding the financial accountability of the nonprofit sector throughout Western society.[18] There is also ongoing concern whether the nonprofit sector will unequally draw retiring workers from the private sector as the currently large Baby Boomers age.[19] Development of the third sector, it is argued, is linked to restructuring of the welfare state and further globalization of that process through neo-liberal strategies of the Washington consensus.[20]

In a 2013 New York Times op-ed and radio podcast, The Charitable-Industrial Complex, Peter Buffett uses the terms "philanthopic colonialism" and "conscience laundering," and describes his insights into "searching for answers with their right hand to problems that others in the room have created with their left" rather than systemic change.[21][22]